Analysts: The Federal Reserve may be moving towards dovishness

On the 10th local time, after the two-day monetary policy meeting of the US Federal Reserve Board, it announced that it would cut the target range of the federal funds rate by 25 basis points to between 3.50% and 3.75%. At the same time, the Federal Reserve announced plans to expand its balance sheet starting this month. In terms of specific actions, the Federal Reserve said that it will start buying $40 billion of short-term US Treasury bonds in the next 30 days from this Friday local time, and expects the purchase scale to remain high in the next few months, and then gradually reduce. Some analysts interpreted this move as an "implicit" way to lower interest rates. Within the Fed, hawks are generally more focused on inflation and tend to maintain high interest rates, while doves are more focused on supporting the labor market and want to lower interest rates. Now the focus of the market has turned to the next policy direction of the Federal Reserve. Although the dot plot shows that the Federal Reserve forecasts only one interest rate cut next year, which is the same as the forecast three months ago, the market is betting that the Federal Reserve will cut interest rates even more next year. According to CME Federal Rate Futures, the market believes that the probability of the Federal Reserve cutting interest rates twice or more in 2026 is about 68%. Some analysts interpret the economic outlook released by the Federal Reserve to suggest that the current Fed may be turning towards doves.